The Days Of Easy Money From Commodities Is Over
I've watched investors pour money into commodities as speculators continuously bid up the price. Gold and silver have hit all-time highs, and were showing no sign of slowing down. With gold trading at over $1,500 an ounce, and silver over $45 an ounce, anyone on the outside could see these numbers wouldn't last. Speculators had created a bubble within commodities, and that bubble would soon burst.
Silver had the largest one-day drop in 3 years as prices fell by 8% on Thursday. If this isn't enough to scare investors away from commodities, I don't know what will.
The jobs report was released this morning, showing higher-than-expected gains in the private sector, which has driven the stock market back up. With 59,000 more jobs created than expected, the Dow opened up almost 130 points today, gaining back much of what it lost, and temporarily halting the commodity bubble bursting. But news is only temporary, and speculator will continue to bet on the other side now, driving commodity prices down.
Investors buy commodities (especially gold and silver) as a hedge against inflation, since a rise in prices in imminent with the Fed completing its full complement of $600 billion from QE2. But I believe now is the time to get out of commodities, and focus your money elsewhere.
Where should you be looking? Financial companies. They took one of the hardest falls during the 2008 financial crisis, and many of them are still trading well under what they're worth.